199A TCJA - The S Corporation Association

Defense of the “Framework’s” Pass Through Tax Rate

The class warfare debate over the tax reform “Framework” has shifted its focus to the pass through business provisions. John Harwood has a typically one-sided piece on the CNBC website, which includes this paragraph:

“There is no strong policy justification for the special pass-through rate in the GOP’s plan,” said Kyle Pomerleau, an analyst at the conservative Tax Foundation. Since pass-through earnings represent around one-third of all income for the top one percent of taxpayers, Pomerleau added, the provision tilts the plan’s benefits toward the wealthy while favoring one kind of business over others.

Kyle is wrong of course. …

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admin2021-08-16T14:02:24+00:00October 10, 2017|

Pass Through Tax Rates and the 70/30 Rule

Axios reported over the weekend that the tax plan to be rolled out by the “Big Six” Wednesday will call for a 35 percent top rate for individuals, 25 percent for pass through businesses, and 20 percent for corporations.

If true (that’s a big “if” these days with all the misinformation flying around), it’s great news. It would mean both Congress and the Administration have committed to treating Main Street businesses fairly in tax reform. That said, the devil is in the details here. As S-Corp readers know, the challenge in establishing a separate rate for pass through businesses is …

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admin2021-08-16T14:02:29+00:00September 25, 2017|

Tax Reform Statement & Pass Through Taxes

Just in time for the August recess, the House, Senate and the White House released a joint statement yesterday on the status of their tax reform talks and their plans moving forward. You can read the statement here. From our perspective, here are the key points:

“While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”

A primary purpose of the statement was to pivot the tax conversation away from the House Blueprint and the …

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admin2021-08-16T14:02:33+00:00August 1, 2017|

Ways & Means Takes on Tax Reform

The House Ways and Means Committee began its focus on tax reform yesterday with a hearing on economic growth. The hearing, entitled “How Tax Reform Will Grow Our Economy and Create Jobs” featured four company representatives and one hedge fund manager invited, oddly enough, by the Minority.

One of the company witnesses, Zach Mottl, is the Chief Alignment Officer for Atlas Tool Works, a multi-generation family business located outside of Chicago. Operating in an industry with large, multinational competitors, Zach made clear the current rate structure is tilted against smaller companies like theirs that lack the international presence to …

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admin2021-08-16T14:02:35+00:00May 19, 2017|

Brady Plan and Pass Throughs

The Wall Street Journal featured S-Corp Board member Clarene Law last week in a story focused on the new tax rates for pass through businesses in the House tax reform plan. As the story notes:

Clarene Law said a lower tax rate on pass-throughs would free up capital to add rooms to her hotels in Jackson, Wyo. or buy new air conditioners and washing machines.

“25% if it’s pure, not all cobbled up with a bunch of surtaxes, it would be a great benefit,” said Ms. Law, chief executive officer of Elk Country Motels Inc. Her businesses own more than 400 …

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admin2021-08-16T14:02:40+00:00March 17, 2017|